FactSet’s FY21 EPS Guidance Disappoints After 2Q Miss


FactSet Research Systems announced FY21 EPS guidance that fell short of analysts’ expectations. Meanwhile, the integrated financial information and analytical applications provider reported lower-than-expected earnings in 2Q.

FactSet (FDS) reported 2Q earnings of $2.72 per share, which grew 6.7% year-over-year driven by higher operating margins offset by an increase in the tax rate. However, earnings missed the Street’s estimates of $2.74 per share.

Revenues increased 6% to $391.8 million and marginally beat the consensus estimates of $391.5 million. The top-line grew due to higher sales of analytics and CTS (content and technology solutions). At the end of Feb. 2021, the annual subscription value (ASV) plus professional services stood at $1.6 billion, compared with $1.5 billion at the end of Feb. 2020. (See FactSet Research stock analysis on TipRanks)

As for fiscal 2021, FactSet anticipated adjusted earnings in the range of $10.75-$11.15 per share, lower than the consensus estimates of $11.17 per share. The company forecasted FY21 revenues of $1.570-1.585 million while analysts were anticipating revenues of $1.58 million.

Following the results, Oppenheimer analyst Owen Lau maintained a Hold rating on the stock. In a note to investors, the analyst said, “in the near term, growth investment could be a drag to margin expansion, but those are key ingredients for future revenue growth, reflected on accelerating ASV growth.”

Overall, the rest of the Street has a Moderate Sell consensus rating based on 3 Sells and 2 Holds. The average analyst price target of $275 implies downside potential of about 11.7% to current levels. Shares have gained 23.4% in one year.

On TipRanks’ Smart Score ranking, FactSet Research gets a 3 out of 10, suggesting that the stock is likely to underperform market expectations.

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